EX-10.1






Exhibit 10.1




EMPLOYMENT AGREEMENT




THIS EMPLOYMENT AGREEMENT is made and effective as of the date indicated below by and between
DATATRAK INTERNATIONAL, INC., an Ohio corporation with its principal place of business at 6150
Parkland Boulevard, Suite 100, Mayfield Heights, Ohio 44124 (“Company”) and G. MATTHEW DELANEY
(“Employee”).



WITNESSETH:




     WHEREAS, in February 2007, Employee became employed by the Company in the position of Vice
President of Global Marketing and Sales;



     WHEREAS, in May 2008, the Company’s Board of Directors appointed Employee as the Company’s
Interim President;



     WHEREAS, the Company desires to retain Employee as its Vice President of Global Marketing and
Sales, and further to employ him in the position of Interim President, and Employee desires to be
so retained and employed; and



     WHEREAS, the Employee and the Company desire to enter into an agreement expressly indicating
the terms and conditions of their relationship.



     NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the
Company and the Employee agree as follows:



     1. DUTIES. The Company employs Employee in the position of Vice President of Global
Marketing and Sales, and further adds to Employee’s duties, on an interim basis of indefinite and
undetermined duration, the responsibilities of the position of Interim President. Employee shall
perform his duties under the direction of the Company’s Chief Executive Officer or other designee
of the Company. In connection with his service to the Company in the position of Interim President,
Employee agrees to accept election to and serve as an officer of the Company. Employee acknowledges
and agrees that if, for whatsoever cause or reason, he is removed from the position of Interim
President or not appointed to the position of President, then Employee shall no longer be
designated as an officer of the Company. During the Term of this Agreement, as those terms are
defined herein, Employee shall at all times, faithfully, industriously and to the best of his
abilities, perform all duties that reasonably may be required of him by virtue of his position.
Employee acknowledges and agrees that his duties as Interim President and as Vice President of
Global Marketing and Sales will require him to spend a reasonable amount of his professional time
each month in both the Company’s Cleveland, Ohio office and its Bryan, Texas office. Employee shall
devote his full business time and efforts to the affairs of the Company.



     2. SALARY. The Company will pay Employee a base salary of One Hundred Fifty Thousand
($150,000) per year in accordance with the Company’s payroll practices, or in such other periodic
method to which both parties agree, minus appropriate withholdings and deductions. The Company will
review Employee’s compensation



 









 







hereunder on an annual basis, and may adjust the above-indicated level, in its sole
discretion, based on Employee’s performance of his duties hereunder and/or the performance of the
Company; provided, however, that the Company shall not reduce the Employee’s salary to be paid in
any succeeding year to an amount less than the Employee’s base salary as established herein or as
increased over time without Employee’s written agreement. Both parties agree that the above
reference to an “annual base salary” or to other benefits of employment, including but not limited
to bonuses, does not in any way guarantee and/or add to the express length of employment of
Employee, other than as set forth herein.



     3. BONUS PLANS. The Company may pay Employee additional compensation in the form of a
discretionary bonus and/or pursuant to an established bonus plan(s) that the Company may have in
effect from time to time for similarly situated employees. The Company reserves the right to modify
or cancel any bonus plan(s) that it may have in effect at any given time. The Company will be
obligated to pay all amounts earned and due to Employee prior to the modification or cancellation
of any established bonus plans. The bonus may be paid in cash, in equity securities of the Company,
in stock options, or in any combination thereof at the Company’s discretion.



     4. STOCK OPTION PLAN/GRANTS. In connection with Employee’s appointment as Interim
President, the Company has granted Employee 35,000 restricted common shares, which shall be
governed by the terms and conditions of the Restricted Stock Agreement between Employee and the
Company dated May 19, 2008. Additionally, during the Term of this Agreement, Employee shall be
eligible to participate in any stock option plans that the Company may make available from time to
time for similarly situated employees. The granting of stock options will be pursuant to the terms
and conditions of a separate Stock Option Agreement.



     5. BENEFITS. During the Term of this Agreement, Employee shall be entitled to
participate in any employment benefit plans which are maintained or established by the Company for
its similarly situated employees, including enrollment in medical, dental, and life insurance
policies or plans, as well as a 401K plan, and all paid holidays afforded to other similarly
situated employees.



     6. VACATIONS. During the Term of this Agreement, Employee shall be


entitled to annual paid vacation time equal to fifteen (15) days, to be taken at a time or times
acceptable to the Company and otherwise consistent with the terms and conditions of this Agreement
and the Company’s vacation pay policy.



     7. RELOCATION EXPENSES. During the Term of this Agreement, if Employee is required by
the Company to relocate his permanent residence to a location outside of Austin, Texas, then the
Company will reimburse Employee for all reasonable relocation expenses, including the expense of
moving Employee’s possessions and reasonable expenses incurred in travel to the new location for
the purpose of locating housing. The Company will further reimburse Employee for all reasonable
temporary



 









 







housing expenses at the new location for the first 90 days after the date requested by the
Company for the Employee’s relocation.



     7.1 REAL ESTATE BROKER’S COMMISSIONS. The Company will reimburse Employee for
reasonable licensed real estate broker’s commission (Broker’s Fee) incurred by Employee in the sale
of the Employee’s permanent residence if Employee is required by the Company to relocate his
permanent residence to a location outside of Austin, Texas. The Employee will provide the Company
with appropriate documentation to support the Broker’s Fee incurred by Employee.



     8. TERM AND TERMINATION OF AGREEMENT. This Agreement shall commence on the effective
time indicated below and shall continue for a period of one (1) year (the “Initial Term”), unless
sooner terminated as provided in paragraphs 8.1, 8.2, 8.3, 8.5, 8.6, 8.7 or 8.8 of this Agreement.
This Agreement will renew automatically for successive one (1) year periods (the “Renewal Period,”
and collectively with the Initial Term, the “Term”) unless previously terminated or either party
gives notice of non-renewal at least 90 days prior to the commencement of such Renewal Period. The
parties acknowledge and agree that nothing in this Agreement shall be construed as any guarantee of
the express time period during which Employee shall serve as the Company’s Interim President, nor
does it any way guarantee Employee’s appointment as the Company’s President.



     8.1 TERMINATION FOR DEATH. This Agreement shall terminate automatically upon the
Employee’s death. With the exception of any benefits under the Company’s employee benefit plans,
and any stock options that have vested under the Company’s Stock Option Plan(s) which may inure to
the benefit of Employee’s beneficiaries, upon Employee’s death, the Company shall have no further
obligations under the terms and conditions of this Agreement. If Employee’s employment is
terminated pursuant to this section during the Term of this Agreement, employee shall be entitled
to his salary through the date of such termination, payment for any pro-rata bonus earned and due
at the time of termination pursuant to any (if any) bonus plan(s) the Company may have in effect at
the time of termination, and to any other employee benefits maintained or established by the
Company for its similarly situated employees.



     8.2 TERMINATION FOR DISABILITY. The Company and the Employee acknowledge and agree
that the essential functions of the Employee’s position are unique and critical to the Company and
that a disability condition which causes the Employee to be unable to perform the essential
functions of his position with or without reasonable accommodations for a period in excess of one
hundred twenty (120) calendar days will constitute an undue hardship on the Company. If the Company
determines in good faith upon medical certification and in consultation with Employee and, if
necessary or appropriate, with Employee’s physician(s), that the Employee is disabled and unable to
perform the essential function of his position with or without reasonable accommodations, it may
give Employee written notice of its intention to terminate Employee’s employment. If Employee’s
employment is terminated pursuant to this section during the Term of this Agreement, employee shall
be entitled to his salary



 









 







through the date of such termination, payment for any pro-rata bonus earned and due at the
time of termination pursuant to any (if any) bonus plans the Company may have in effect at the time
of termination, and to any other employee benefits maintained or established by the Company for its
similarly situated employees.



     8.3 TERMINATION BY COMPANY FOR CAUSE. During the Term of this


Agreement, the Company may terminate Employee’s employment for cause by written notification citing
the specific reasons for termination. For purposes of this Agreement, “Cause” means:



     (1) Employee’s conviction of a felony involving moral turpitude or a felony in connection with
his employment;



     (2) Employee’s theft, fraud, embezzlement, material willful destruction of property or
material disruption of the operations of the Company;



     (3) Employee’s use or possession of illegal drugs and/or unauthorized use or possession of
alcohol on Company premises or reporting to work under the influence of same; or



     (4) Employee’s engaging in conduct, in or out of the workplace, which in the Company’s
reasonable determination has an adverse effect on the reputation or business of the Company;



Under any such termination for Cause, all rights, benefits, obligation and duties of the parties
hereunder shall immediately cease, except any compensation due and owing through the date of
termination and/or fringe benefits which have vested on Employee’s behalf prior to such
termination, if any, and except for the covenants of Employee set forth in Section 9 of this
Agreement.



     8.4 SUSPENSION. In the event Employee engages in conduct subjecting Employee to
potential civil or criminal liability which could have an adverse effect upon the Company’s
reputation or business or is related to Employee’s duties and responsibilities, the Company
reserves the right to immediately suspend Employee with pay, pending investigation and/or the
outcome of the matter.



     8.5 TERMINATION BY EMPLOYEE WITHOUT GOOD REASON/NON-RENEWAL BY EMPLOYEE. During the
Term of this Agreement, Employee may terminate his employment and this Agreement at any time for
any or no reason upon at least 30 days written notice by the Employee directly to the Company’s
Chief Executive Officer. Prior to and/or during any Renewal Period, Employee may also terminate
this Agreement by giving a notice of non-renewal at least 90 days prior to the commencement of the
next Renewal Period. Employee acknowledges and agrees that a voluntary resignation, termination or
retirement by Employee during the Term of this Agreement as described in this Section 8.5, and/or a
notice of non-renewal by Employee prior to and/or during any Renewal Period as described in this
Section 8.5, shall result in the termination



 









 







of this Agreement and all rights and obligations under this Agreement shall immediately cease,
except any fringe benefits or stock options which have vested on Employee’s behalf prior to such
termination.



     8.6 TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may terminate his employment at
any time during the Term of this Agreement for “Good Reason.” “Good Reason” shall mean any material
reduction by the Company of Employee’s duties, responsibilities or base salary, as such were in
effect immediately prior to his appointment as Interim President; provided, however, that the
removal of Employee from the position of Interim President, for whatsoever cause or reason, or the
Company’s failure to appoint Employee to the position of President, for whatsoever cause or reason,
shall in no way constitute “Good Reason” under this Agreement. Prior to any Termination by Employee
for Good Reason pursuant to this Section 8.6, Employee shall provide the Chief Executive Officer
with sixty (60) calendar days’ written notice of the acts and/or omissions of the Company which
Employee asserts constitute “Good Reason,” and if, at the conclusion of that sixty (60) calendar
day period, the Company has not undertaken reasonable efforts to cure or correct the alleged acts
and/or omissions, then Employee may terminate his employment pursuant to this Section 8.6. In the
event of such termination by Employee for Good Reason, Employee shall be entitled to receive (i)
his salary through the date of such termination and for a period of one (1) year after such
termination, and (ii) outplacement services from an agency to be selected by the Company in an
amount not to exceed Ten Thousand ($10,000) Dollars.



     8.7 TERMINATION OTHER THAN FOR CAUSE, DEATH, OR DISABILITY; TERMINATION BY
NON-RENEWAL. During the Term of this Agreement, the Company may terminate Employee for other
than Cause, Death, or Disability at any time during the Term of this Agreement, upon not less than
thirty (30) days notice; provided, however, that the removal of Employee from the position of
Interim President, for whatsoever cause or reason, or the Company’s failure to appoint Employee to
the position of President, for whatsoever cause or reason, shall in no way constitute “Termination
Other Than for Cause, Death, or Disability; Termination by Non-Renewal” under this Agreement. Prior
to and/or during any Renewal Period, the Company may also terminate this Agreement by giving a
notice of non-renewal at least 90 days prior to the commencement of the next Renewal Period. In the
event the Company exercises its right to terminate the Employee other than for Cause, Death, or
Disability at any time during the Term of this Agreement as described in this Section 8.7, and/or
gives a notice of non-renewal prior to and/or during any Renewal Period as described in this
Section 8.7, Employee shall at the time of such termination be entitled to receive (i) his salary
through the date of such termination and for a period of one (1) year after such termination, and
(ii) outplacement services from an agency to be selected by the Company in an amount not to exceed
Ten Thousand ($10,000) Dollars.



     8.8 CHANGE OF CONTROL. If a Change of Control (as defined in this paragraph) shall
occur during the Term of this Agreement, and Employee’s employment is (a) not continued by the
purchaser or successor or (b) there is a material change in Employee’s role, duties or
responsibility following a Change of Control and Employee



 









 







voluntarily terminates his employment and this Agreement therefor, Employee shall be entitled
to receive (i) his salary through the date of such non-continuation and for a period of one (1)
year after such non-continuation, and (ii) outplacement services from an agency to be selected by
the Company in an amount not to exceed Ten Thousand ($10,000) Dollars; provided, however, that the
removal of Employee from the position of Interim President, for whatsoever cause or reason,
following a Change of Control, or the Company’s failure or the failure of any purchaser or
successor of the Company to appoint Employee to the position of President, for whatsoever cause or
reason, following a Change of Control, shall in no way entitle Employee to any of the payments or
benefits described in this Section 8.8. For purposes hereof, the term “Change of Control” shall
mean (A) the sale of all or substantially all of the assets of the Company, (B) the sale of a
majority of the outstanding shares of capital stock of the Company entitled to vote in a single
transaction or series of related transactions (except with respect to a public offering of the
Company’s shares of capital stock), (C) the consummation of a merger, consolidation or similar
transaction involving the Company in which the holders of the Company’s capital stock immediately
prior to the transaction do not retain at least a majority of the voting power of the Company
surviving the merger or its parent Company, or (D) the complete liquidation or dissolution of the
Company;



     8.9 BINDING ARBITRATION. In the event, upon termination of Employee’s employment, a
disagreement exists between Employee and the Company as to which section of this Section 8 governs
such termination (i.e., if the party terminating Employee’s employment (the “Terminating Party”)
claims that “Cause,” “Good Reason” or “Disability” exists and the other party (the “Disputing
Party”) disputes such claim), the issue of which section should govern such termination shall be
submitted by the parties to binding arbitration in accordance with the provisions of this Section
8.9. Within thirty (30) days after termination of Employee’s employment the Disputing Party may
challenge the claimed basis for termination by giving written notice (the “Dispute Notice”) of such
challenge to the Terminating Party. Within thirty (30) days after delivery of such Dispute Notice,
the parties shall appoint an independent arbitrator experienced in employment matters who shall
determine which section of this Section 8 applies to the termination. In the event the parties
cannot agree on an arbitrator within thirty (30) days after delivery of the Dispute Notice, then
each party shall appoint one arbitrator, and the two arbitrators shall appoint a third arbitrator.
In either case, the determination of the arbitrator or the majority of the arbitrators, as the case
may be, shall be final and binding upon both Employee and the Company. The authority of the
arbitrators hereunder shall be limited to determining which section of this Section 8 governs, and
the arbitrators shall not have authority to reinstate Employee, to alter the amount of the payment
due to Employee under the applicable section of this Section 8, or to award Employee or the Company
any other amounts by way of damages or otherwise. Any arbitration hereunder shall be conducted in
Cleveland, Ohio in accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association. In the event the Disputing party fails to give the Dispute
Notice within the thirty (30) day period provided above, all rights of the Disputing Party to
challenge the claimed basis for termination shall expire.



 









 





     9. RESTRICTIVE COVENANTS OF EMPLOYEE. Employee acknowledges that the services rendered
to the Company are special, unique, and of extraordinary character; that the market for the
Company’s services and products is worldwide; and that through the Internet, World Wide Web, and/or
other media of electronic commerce, the Company regularly transacts business on a worldwide basis.
In light of those factors, Employee acknowledges that the following covenants are reasonable and
necessary for the protection of the Company’s reasonable business interests.



     9.1 NON-COMPETITION. During the period of Employee’s employment by the Company and, in
the case of the termination of Employee’s employment under Sections 8.2, 8.6, 8.7, or 8.8 hereof,
for a period of one (1) year thereafter, or (ii) in the case of the termination of Employee’s
employment under any provision of Section 8 hereof other than Sections 8.2, 8.6, 8.7, or 8.8 for a
period of eighteen (18) months (the “Non-competition Period”), Employee shall not, directly or
indirectly, whether as an individual on his own account, or as a partner, joint venturer, director,
officer, employee, consultant, creditor and/or agent or otherwise, in any place in which the
Company now or hereafter conducts business:



     (a) Enter into or engage in any business which provides software and related web hosting,
educational and training services, and/or other Applications Services Provider (“ASP”) services, to
customers in the pharmaceutical, biotech, and/or medical device industries to assist in the
electronic capture of clinical trial patient data from clinical trial sites;



     (b) Solicit customers, business, patronage or orders from, or perform other services for, any
person, firm, association, corporation or other entity, engaged in any business, including without
limitation, an Applications Services Provider, which directly or indirectly competes with the
business of the Company or parent or subsidiary of, or entity controlling, controlled by or under
common control with the Company (“Company Affiliate”); or



     (c) Promote or assist, financially or otherwise, any person, firm, association, corporation or
other entity, engaged in any business, including without limitation, an Applications Services
Provider, which competes with the current or future business of the Company or any Company
Affiliate; provided, however, that the foregoing covenant shall not be deemed to have been violated
solely by (i) the ownership of equity securities of an entity which competes with a future business
of the Company or any Company Affiliate, to the extent that such securities are acquired prior to
the date that the Company or Company Affiliate commences such future business; or (ii) the
ownership for investment purposes of less than five percent (5%) of the equity securities of any
entity which has equity securities listed on a national securities exchange or publicly traded in
the over-the-counter market.



     9.2 CONFIDENTIALITY AND WORK PRODUCT. Employee acknowledges that during his employment
with the Company he has had and will have access to confidential information, knowledge, and data
regarding the business of the Company



 









 







and Company Affiliates, whether received, acquired or developed by him or otherwise,
including, without limitation, trade secrets, design information, software programs, research
methods and techniques, scientific data and formulae, pricing data, customer information and all
other information or data relevant to the business of the Company (collectively, except any of the
foregoing which is at the time generally known to the public and which did not become generally
known through the breach of any agreement restricting its disclosure, “Proprietary Information”).
Employee further acknowledges that in the course of his employment he may be producing designs,
analyses, recommendations, reports, complications, software, studies and other worth product,
acquiring information on behalf of the Company and any conceive of ideas, innovations, processes
and improvements relating to the business of the Company (collectively, “Work Product”). As to the
ownership, disclosure and use of Proprietary Information and Work Product, Employee agrees that,
from and after the date hereof:



     (a) he will promptly disclose in writing to the Company all Work Product;



     (b) all Proprietary Information, all Work Product and all rights therein are and shall be the
sole and exclusive property of the Company and all rights or interest of Employee therein are
hereby assigned by Employee to the Company, and Employee will cooperate with and assist the Company
from time to time, in any manner reasonably requested by the Company, in obtaining title or
ownership therein or evidence thereof;



     (c) Employee shall not divulge, disclose or communicate to any third party in any manner,
directly or indirectly, Proprietary Information or Work Product;



     (d) Employee will not use for his own benefit or purposes or for the benefit or purposes of
any third party or permit or assist, by acquiescence or otherwise, any third party to use in any
manner, directly or indirectly, Proprietary Information or Work Product; and



     (e) upon the termination of his employment, Employee will promptly deliver to the Company all
Proprietary Information and Work Product, including, without limitation, any reproductions, copies,
abstracts, summaries or other documents or records of Proprietary Information or Work Product.



     9.3 NO INTERFERENCE. During the Non-competition Period, Employee agrees that he shall
not:



     (a) interfere with the contractual relationship of the Company, any Company Affiliate,
customers, suppliers, employees or other which relate to the business of the Company or any Company
Affiliate; or



     (b) induce any employee or representative of the Company or any Company Affiliate not to
continue as an employee or representative of the Company or any Company Affiliate;



 









 





     (c) make remarks or take any other action which disparages or diminishes the reputation of the
Company or any Company Affiliate; and



     (d) without limiting the generality of the foregoing, without the prior written consent of the
Chief Executive Officer, directly or indirectly employ, whether as an employee, officer, director,
agent, consultant or independent contractor, any person who was an employee, representative,
officer or director of the Company or any Company Affiliate at any time during the six-month period
prior to the date of such proposed employment; provided, however, that the covenants contained in
this clause (d) shall not apply with respect to such person terminated by action of the Company or
any Company Affiliate.



     9.4 INJUNCTIVE RELIEF. Both parties hereto recognize that the services to be rendered
by Employee to the Company are special, unique and of extraordinary character; that the market for
the Company’s services and products is worldwide; that through the Internet, World Wide Web, and/or
other media of electronic commerce, the Company regularly transacts business worldwide; and that if
Employee hereafter fails to comply with the restrictions and obligations imposed upon him
hereunder, the Company may not have an adequate remedy at law. Accordingly, the Company, in
addition to any other rights which it may have, shall be entitled to seek injunctive relief to
enforce such restrictions and obligations without the necessity of posting any bond.



     10. REPRESENTATIONS OF EMPLOYEE. Employee represents and warrants to the Company that
he has the capacity to enter into this Agreement that he is not a party to any agreement,
arrangement or other understanding with any person or entity which might affect, restrain or
conflict with the provisions of this Agreement and/or the services to be provided to the Company by
Employee under this Agreement.



     11. REFORMATION OF AGREEMENT; SEVERABILITY. In the event that any provision or term of
this Agreement is found to be void or unenforceable to any extent for any reason, it is the
agreed-upon intent of the parties hereto that all remaining provisions or terms of the Agreement
shall remain in full force and effect to the maximum extent permitted and that the Agreement shall
be enforceable as if such void or unenforceable provision or term had never been a part hereof.



     12. ASSIGNMENT. This Agreement shall inure to the benefit of, and shall be binding
upon, the Company, its successors and assigns. Employee shall not assign this Agreement without the
prior written consent of the Company.



     13. NOTICE. Any notice required to be given under the terms of this Agreement shall be
in writing, and mailed to the recipient’s last known address or delivered in person. If sent by
registered or certified mail, such notice shall be effective when mailed; otherwise, it shall be
effective upon delivery.



     14. ENTIRE AGREEMENT; AMENDMENTS: WAIVERS. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter



 









 







hereof and replaces or supersedes any previous agreement on such subject matter. It may not be
changed orally, but only by agreement, in writing, signed by each of the parties hereto. The terms
or covenants of this Agreement may be waived only by a written instrument specifically referring to
this Agreement, executed by the party waiving compliance. The failure of the Company at any time,
or from time to time, to require performance of any of Employee’s obligations under this Agreement
shall in no manner affect the Company’s right to enforce any provisions of this Agreement at a
subsequent time; and the waiver by the Company of any right arising out of any breach shall not be
construed as a waiver of any right arising out of any subsequent breach.



     15. HEADINGS. The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or interpretation of this Agreement.



     16. COUNTERPARTS. This Agreement may be executed in multiple counterparts each of
which shall be deemed an original but all of which together shall constitute one and the same
document.



     17. GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio without giving effect to the conflict of law provisions thereof.



IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of May 15, 2008.



	 	 	 	 	 	 	 
	 	 	     /s/ G. Matthew Delaney	 	 
	 	 	 	 	 
	 	 	G. Matthew Delaney (Employee)	 	 
	 
	 	 	 	 	 	 
	 	 	DATATRAK International, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Dr. Jeffrey A. Green
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:
	 	Chief Executive Officer